"Against the Grain": Jim Moroney on the Decision to Erect a Paywall at The Dallas News

Shortly before The Dallas Morning News announced the erection of its paywall, which goes into place February 15, publisher and CEO Jim Moroney sent to the staff a memo in which he wrote: Brace yourself. Said Moroney in a phone conversation with Unfair Park at 6:30 this morning, as he was driving to the airport to catch a flight to Phoenix, the memo more or less warned: "We'll be ridiculed and vilified, because this goes against the grain." And, sure enough, in comments here and on the paper's website and even on The Consumerist this morning, skeptics outweigh supporters of the pay-to-play plan by, oh, a thousand to one, give or take.

"We've done things before that amount to taking risks, and this is another one," Moroney tells Unfair Park. "And I said: Look, this may not succeed." But, he says, it was necessary to at least try. He explains why in a lengthy Q&A that follows, which is free.

We've known the paywall was coming for some time; and you've hinted at it for months, if not longer. At the same time, you had to know what the reaction to the announcement would be. What in the end was the rationale behind charging readers for online content?

Our industry has been trying to prove that they can continue to grow page views and sell more ads and make a bsuiness of it, and here we are 15 years later, and 10 percent of total revenues comes from online, and that's not one of those acceleration paths that's sustainable. When you look at how far ad revenues have fallen, it doesn't seem to me continuing to grow more page views and sell more ads based on that is a strategy that is going to work. So there are other ways of trying to create different business models, and for ours, one of the ways that has been successful has been selling access to the content through the paper, and we need to take a chance and see if, on tablets particularly and smartphones obviously, people are willing to pay for content. ... As I said in the note to the staff, when you're seeing four years of declining ad revenue and you're unsure if that'll turn around any time soon, the failure we have is the failure to take risks, and if we fall flat on our face, we'll pick up and move on.

Does that mean there's a fish-or-cut-bait date?

I honestly haven't set a date. I did say we've got to give the strategy time to succeed. We'll course-correct. We're not going in ham-fisted, saying, "Damn the torpedoes." We'll course-correct as the data suggests. We'll give it time. You set your sights on 2011 and work this as well and as hard as you can. It's like taking depth measurements along the way.

You're not only charging $16.95 for access to online content, but you also upped the $30 monthly subscription price by $4. Which leads one to believe this is as much about the print product as the digital delivery.

It's about both. My personal opinion is there isn't a metropolitan newspaper company that can make whatever this eventual transition is into a mostly digital business without having a healthy print product, because so much revenue is still tied up in that. You have to be sure you're still having a strengthened newspaper product, and then you look at how you make this digital transition. For us, we've gone to the customer and said, "We need you to pay for more of the cost of what we do every day than we have in the past," because the "ad subsidy" -- and it was a subsidy -- I don't think it works online and works to a lesser degree in print than it used to. It's like, in the old days ad rates went up regularly. Some modest increase in the cost of the paper has to be reckoned with as we have wage increases, and newsprint's been going up in the last six months.

We have not increased the price of the paper since May 1, 2009. I think that some modest increase in the price of the paper for the people who want to continue to purchase it is probably in the cards going forward. It's like most other products. If you look at milk, cereal, most of the things we consume, Coca-Cola, there's a small but steady increase in the price of the goods. The business model has changed to what's now a 55-45 split between ads and consumer contribution, and there will have to be a small increase every couple of years, if not more frequently.

More than a year ago, during a Dallas Press Club panel, you said you'd be more likely to charge for hyperlocal news stories -- say, City Hall or police pieces -- than investigative stories. What will the paper now charge for, and how did you come to that decision?

The way we distinguished what would and what wouldn't be [behind the paywall] was whether we thought it was a commodity. Today breaking news is pretty commoditized. The television stations, maybe even KRLD, will be on breaking news, and it's available to everyone, and its covered as it happens. You can put a camera up, and it's news. If a gas well blew up, and if we made that available to everyone for free, and then turned around the next day and offered analysis on why it happened, that probably wouldn't be free. Anything we're originating, anything that's unique to us, something that's not duplicated in other local media outlets, those are the things that'd be available only to people who pay for it.

Wire news, breaking news, commercial content, obits -- all of that will remain free. And there will be a little bit of judgment call from time to time about what's a commodity and what's not, and I trust our newsroom will make the right call as things begin to evolve. I think we'll all be in a learning process and err more to the side of "this is something unique to us" in the beginning and make course corrections along the way.

You'll have a chance this month to register with the site with name, rank and serial number, and you'll see a "D" by some articles, and that'll indicate that's a story that in the future you'll have to pay for. There will be a mix of stories, and some days you'll see a lot that are free, and some days local news dominates the headlines and you'll see three, four "D"s there.

You guys tried this a few years back by charging for Cowboys content. It didn't last long. How's this different?

It worked to a degree in that there were a reasonably good number of people who paid for it. But with that newsletter versus selling ads around it, the math worked out in favor of the advertising. And it was a time when costs per impression online were a lot higher. Today, with the amount of available inventory and the seemingly decreasing CPMs, I don't think the math works anymore. It may be if we did that all over again, we may say it's better to leave it paid.

On Cowboys, for instance, a game summary is probably going to be free, even if we write it. The AP's writing it, the Star Telegram's writing on, ESPN is too. But what does Tim Cowlishaw or Jean-Jacques Taylor think about the game? Those are the things that become more valuable. As I like to say: We need to be providing perspective and interpretation and analysis. The why and how, the perspective, is what is distinguishable.

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How much do this new subscription rate -- and the talk of raising rates more often -- commingled with the less-expensive paywall have to do with preparing folks for the inevitable demise of the print product, whenever that day may come?

The thing I am more interested in is the people who subscribe to the paper and getting them used to the digital apps. I wonder if people will say, "I am no longer a newspaper reader." That may be a high-class problem. These are our best customers -- the people who pay $360 a year to take The Dallas Morning News -- and making these things available to them at no additional cost is a way of saying I'd like to see what their engagement is. How often do they use a tablet, a smartphone? They're already our most engaged users -- the people who subscribe to the paper. Part of this is to see how their digital reading behavior changes. And maybe the app is as good or better than the print edition. There's that possibility, and I think we'll have have to wait and see.

But in the course of your conversations about the digital future, were there indeed talks about: One day, when the paper version no longer exists ...?

We have raised the price of the paper deliberately, and as our in-and-out subscribers have departed, we're down to a core group that I like to say have a bumper sticker that says, "You'll pry the paper from my cold, dead hands." I think we'll be publishing a paper for a long time -- past a decade and a half, as far out as I can see. The only caveat I have is if these same people -- people not unlike you and me -- say the iPad is as equally good and more affordable, if that group says, "I no longer need to have that physical product" ... maybe you won't have a printed product. But for the next decade, the business is too dependent upon the print to unplug it. The business model doesn't work unless you reduce the scale of our newsroom. If you want a 50-person newsroom, a 75-person newsroom, we'd be having a different discussion. But the scale of our newsroom is what differentiates us from everyone else in the market.